Cultivating a market for innovation in Europe

16 October 2007

Janez Potočnik, European Commissioner for Science and Research, stressed that innovation was not only about science and technology but was also a process which involved introducing new concepts to help the world as a whole.

The Commissioner hopes to create a “knowledge triangle” combining education, research/science and innovation, and is working to change the prevailing idea that the Commission’s primary role is as a funding body in research and development. The European Research Council (ERC) is now responsible for part of the funds, with more than €20 billion of the Seventh Framework Programme (FP7) managed outside the Commission, leaving its in-house staff to concentrate on the policy and substance. The same will be the case with FP8, which will see an increase in research funding.

Mr Potočnik outlined a number of new approaches being introduced. The first is to bring researchers and academics together through the ERC; the second is to bring research closer to the market through joint technology initiatives in public-private partnerships, and the third is to bring together Member States, the Commission and business to forge public-public-private partnerships.

European Research Area

The Commission also uses the European Research Area, created in 2000 as part of the Lisbon Strategy for growth and jobs, to encourage scientific research by creating links between research programmes and researchers across Member States. While this has had some success, the Commission launched a Green Paper and a public consultation on the ERA this year to assess how far it was fulfilling its mandate.

The public consultation’s main conclusion was that “nothing will move if the Commission does not move, but nothing will move if the Commission moves too fast”. It then pinpointed five main areas for action:

·  support cross-border researchers - only approximately 6% of those who gain PhDs in Europe do so outside their native country;

·   improve the infrastructure for cross-border debate and research;

·    set up a proper framework for knowledge transfer with business and academia, and clarify legislation on intellectual property rights;

·    set up joint programmes, such as a strategic energy plan for Europe;

·    encourage greater international cooperation with researchers working outside Europe.

The Commission attaches great importance to introducing the “Fifth Freedom” within Europe - the free movement of knowledge. The Commissioner pointed out that there is a free market in goods, services, capital and people, but knowledge is often protected regionally and nationally. He said better results would be achieved through a cross-disciplinary, cross-sectoral approach.

Improving investment in research

The Commission has set a target for Member States’ investment in R&D of 3% of GDP. This is an increase on its current average of 1.84%, but still below that of the US (6%), Japan (3.15%) and the emerging economies. Encouraging private investment is part of the equation, said the Commissioner, so his institution is working to satisfy the demand for a skilled workforce, the right infrastructure and public support.

With this in mind, it is shaping policies from the demand as well as the supply side, encouraging “Open Innovation” in Europe and creating the conditions where technology and innovation are needed, as well as favourable conditions for business to enter the market.

One obstacle to ‘open innovation’ is that innovation remains the responsibility of the Member States, so they must be encouraged to work together. The Lisbon Agenda and the other reformsset the scene for this, said Mr Potočnik, who described the current situation as 27 countries sailing like domestic vessels in the same direction, with different wind speeds and in their own troubled waters, but still moving forward together.

He finished by comparing national policy-makers to gardeners, who are so busy tending their own plots that they can only look over the fence to see other people’s. They should instead open the gates and work together.

EPC Senior Policy Analyst Fabian Zuleeg summarised the main recommendation of a new EPC Policy Brief on innovation - the need to move from the supply of to the demand for innovation. He said this was a complex, cross-cutting exercise affecting many policy areas in the EU, its Member States and regions, and it demanded a change in culture to foster long-term innovation through education.

Ulla Sirkeinen, Director of the Confederation of Finnish Industry and Employers in Brussels, said business understood the importance of innovation, which it defines in the broadest sense to include non-technological services.

She believed that Europe must be more prepared to take risks and be more innovative - a stance the Commission could encourage by stressing open coordination and the Lisbon Strategy, improving the functioning of the internal market, and pushing for the Fifth Freedom. She also stressed the importance of building Europe’s external market in today’s global business environment.

Ms Sirkeinen gave practical examples of the conditions needed to support innovation: tighten up the legislation governing patents and intellectual property rights, and the rules governing public procurement, to foster innovation.

Her one concern was to avoid just “picking the winners” in the lead markets, rather than “letting all the flowers grow”. All companies had to be involved in innovation, so the Commission should listen to them, treat them as equal partners, give them opportunities and cut red tape.

Gilbert Fayl, Secretary of External Affairs of the European Academy of Science and Arts, said the Commission’s research budget was small in comparison with some private companies - Siemens alone spends €5 billion a year. He stressed that innovation policy requires a combination of cooperation, competition and social solidarity to protect Europe’s citizens, with this social responsibility built into the policy.

He believed the Commission should actively promote an innovation culture within its own services, as he wondered to what extent other EU policies might be harming Europe’s innovation potential. He said the Commission should also launch an EU-wide campaign emphasising that entrepreneurship is a form of innovation, and put in place more active measures to encourage small and medium-sized enterprises (SMEs) to cooperate internationally.

Joachim von Heimburg, Director of Corporate Research and Development, Innovation and Knowledge, Procter & Gamble, said innovation was a challenge for Europe. The EU needed to move from scene-setting to taking action. In addition, as a cross-cutting issue, innovation should not be limited to science and research.

Industry saw research spending as an investment, said Mr von Heimburg, so if Europe could encourage a more innovative climate, industry would be prepared to put more money into research.

The EU could play a pioneering role in driving innovation by making it relevant and focusing on a “big theme”, like sustaining Europe’s energy supply, which could then be translated into a “smart goal”, such as reducing emissions by 2050.

At the same time, Europe needs to create the infrastructure for industry and academia to meet by, for example, forming innovation ‘clusters’. While Europe may be good at carrying out research, it sometimes fails to bring inventions to market, as in the case of the MP3 player, which was researched in Europe but produced in the US.

While having a yardstick of 3% GDP for investment is a positive move, targets are needed to measure progress, said Mr von Heimburg.

EPC Senior Advisor Pavel Telička, who chairs the EPC’s Innovation Task Force, agreed that an innovative culture should be encouraged within the Commission to ensure that all the Directorates-General work together.